FS: US GOLD OPEN – Gold price dips, next week’s FOMC meeting adds pressure
Gold futures slipped in the US on Friday morning when some investors trimmed positions ahead of what promises to be a historically significant week for US monetary policy.
Gold for December delivery on the Comex division of the New York Mercantile Exchange was last down $4.00 at $1,105.30 per ounce. Trade has ranged from $1,104.40 to $1,111.90.
“The US FOMC will meet next Wednesday and Thursday and the potential of seeing the first official US rate hike since June 2006 has once again put the yellow metal under pressure,” Saxo Bank’s Ole Hansen said.
The Fed’s policy board have been locked into a public debate over the correct timing of raising interest rates, which have been near zero since December 2008. In April, the Fed removed all calendar references in its forward guidance, meaning the bank is now entirely data-dependent.
Various FOMC members have turned increasingly hawkish over the past few months, with Fed chairwoman Janet Yellen expressing a desire to lift rates this year.
“We have long argued that the first US rate hike could potentially be a buying opportunity as it removes some of the uncertainty that has lingered over the market for the past three years,” Hansen said.
“For this to work the rate hike will have to be accompanied by a relative dovish statement which could lead to market to conclude that future rate hikes will not be a given, considering weak economic developments outside of the US,” he added.
Elsewhere, the People Bank of China lowered the proportion of deposits that financial institutions need to set aside as reserves to enhance liquidity, the central bank said in a statement.
Earlier, Chinese M2 money supply came in as expected at 13.3 percent, while new loans disappointed at 810 billion yuan. Over the weekend, industrial production, fixed asset investment and retail sales are scheduled for release and might give more clues on the state of the Chinese economy.
US data releases today include the PPI, the core PPI, preliminary UoM consumer sentiment and inflation expectations as well as Federal budget balance.
In wider markets, the dollar was 0.17 percent stronger at 1.1261 against the euro, while Germany’s DAX and France’s CAC-40 were down 0.84 percent and 0.76 percent respectively.
Light sweet crude (WTI) oil futures for October delivery on the Nymex were down $1.06 at $44.88 per barrel and the December Comex copper contract was at $2.4280 per pound, down 1.9 cents.
As for the precious metals, Comex silver for December delivery was down 11.0 cents at $14.535 per ounce. Trade has ranged from $14.520 to $14.745.
Platinum for October delivery on the Nymex was down $3.30 at $977.90 per ounce, while the most-actively traded palladium contract was at $585.00, down $7.50.
